Details of appeals against decisions by the FSB’s Enforcement Committee provide very interesting insight into the practical application of legislation affecting most of our subscribers.
What makes it even more interesting is that the composition of the Appeal Board is such that it provides a much broader legal perspective than just those laws applicable to the financial services industry.
One case, in particular, clarifies what happens behind the scenes when a debarment request is received by the FSB, and how the Appeal Board proceeds when the affected person approaches them to set aside a debarment.
Old Mutual requested debarment of Mr Dumisani Albert Dlamini following a disciplinary hearing after conducting a forensic investigation. It found that he had submitted fictitious policy applications, which is a transgression of the Fit and Proper requirements. Dlamini was both the key individual and only representative of Future Insurance Brokers (the appellants).
The Appeal Board had to determine whether the debarment was justified and, if so, whether the 5 year term was fair.
From the institution of the complaint by Old Mutual, until the appeal application was filed by the Appellants, the “clients” attested to between 4 to 6 affidavits each on requests from Old Mutual, the Appellants and the FSB.
On or about 3 May 2011 Old Mutual lodged a complaint to the FAIS Enforcement Department on the basis that the First Appellant “has been found guilty of Misconduct Honesty & Integrity, as a result of a forensic investigation…’
On 2 June 2011, the Registrar issued a notice of intention to withdraw authorisation in respect of the First Appellant to act as a FSP and notice to debar the second Appellant.
On 6 June 2011, Dlamini submitted his response by way of an affidavit and it was further supported with the affidavits from the aforesaid clients (hence the second set of affidavits). The versions on these affidavits were contrary to the versions submitted to Old Mutual.
The Registrar noted these conflicting versions of the “clients” and, on 5 December 2011 by way of correspondence, requested the “clients” to submit a “detailed explanation” (by way of affidavits) in respect of their conflicting versions.
Having considered these responses as well, the Registrar proceeded to debar the Appellants on 13 April 2012.
Dlamini filed an application to introduce further evidence on 26 January 2013, which primarily constituted further affidavits by four clients as well as affidavits from some of his other clients. Essentially they allege that the signatures on the forms were their authentic signatures. One client further alleged that Old Mutual’s investigator asked him to sign an affidavit without allowing him to read it.
The Chairperson of the Appeal Board allowed such new evidence and requested the Registrar to obtain comprehensive explanations regarding the conflicting versions.
The Registrar undertook to do so by conducting interviews with each of them. They confirmed their versions with the FSB in their last set of affidavits.
In a letter dated 18 September 2013, the Registrar advised that it had reconsidered the matter based on the aforesaid explanations and persisted with its original decision to debar the Second Appellant and withdraw the licence of the FSP.
Dlamini’s appeal application contained serious allegations of misconduct by both Old Mutual and the FSB, which the Appeal Board said warranted further (separate) investigation.
The Appeal Board found that the “…clients certainly lied under oath in their various affidavits.” It then proceeds to outline the reasons for this finding and states that it was probably at the request of Dlamini that they changed their versions under oath.
“Having regard to Dlamini’s conduct aforesaid, the Appeal Board finds that he failed to comply with the general duty to render financial services honestly, fairly, with due skill and with integrity.”
Concerning the debarment period of five years, the Appeal Board took into account mitigating factors normally considered by the courts and reduced the debarment term to four years.
The actual document published by the Appeal Board certainly provides a lot more insight than the scant summary above, and will make interesting reading to any person who wants to gain insight into the practical application of the laws that govern our industry.
Please click on this link to read about this and other very interesting cases: